Test 2
... in the latter 1990s—granting the Banco de México independence and mandating price stability as the central bank’s primary goal—Mexico began installing a framework that has proven remarkably successful. Additional fiscal and financial system reforms of the 1990s and 2000s have eliminated macroeconomi ...
... in the latter 1990s—granting the Banco de México independence and mandating price stability as the central bank’s primary goal—Mexico began installing a framework that has proven remarkably successful. Additional fiscal and financial system reforms of the 1990s and 2000s have eliminated macroeconomi ...
Macroeconomics
... minus depreciation. Depreciation accounts for the decline in the value of an asset as it is used. For example, new tractors are worth more than used tractors because their values have not yet depreciated. D. The unemployment rate is a measure of the percent of the population actively seeking work, n ...
... minus depreciation. Depreciation accounts for the decline in the value of an asset as it is used. For example, new tractors are worth more than used tractors because their values have not yet depreciated. D. The unemployment rate is a measure of the percent of the population actively seeking work, n ...
Hedging Inflation
... Treasury Inflation Protected Securities (TIPS) - are inflation-indexed bonds that were introduced in the U.S. in 1997.6 The principal amount on these bonds is adjusted in proportion to the Consumer Price Index (CPI).7 Note: One challenge with TIPS is that current rates are very low—recently 0.125% ...
... Treasury Inflation Protected Securities (TIPS) - are inflation-indexed bonds that were introduced in the U.S. in 1997.6 The principal amount on these bonds is adjusted in proportion to the Consumer Price Index (CPI).7 Note: One challenge with TIPS is that current rates are very low—recently 0.125% ...
Institute of Business Management Semester: Summer Course
... model. What are the classical and Keynesian views about whether money is neutral in the short run? In the long run? Q#11 Drive aggregate demand (AD) curve? Why does the AD curve slope downward? Give two examples of changes in the economy that shift the AD curve up and to the right and explain why th ...
... model. What are the classical and Keynesian views about whether money is neutral in the short run? In the long run? Q#11 Drive aggregate demand (AD) curve? Why does the AD curve slope downward? Give two examples of changes in the economy that shift the AD curve up and to the right and explain why th ...
Inflation
... • Demand-pull or excess demand Inflation: It occurs when the total demand for goods and services in an economy exceeds the available supply, so the prices for them rise in a market economy. E.g. War produces this type of inflation because demand for war materials and manpower grows rapidly • Cost-pu ...
... • Demand-pull or excess demand Inflation: It occurs when the total demand for goods and services in an economy exceeds the available supply, so the prices for them rise in a market economy. E.g. War produces this type of inflation because demand for war materials and manpower grows rapidly • Cost-pu ...
ECONOMICS FINAL EXAM REVIEW SHEET
... What is the difference between demand and quantity demanded? What is the difference between supply and quantity supplied? What causes demand to shift? What causes supply to shift? Contrast shortage and surplus. Be sure to include what happens to price. List the four factors of production. Identify a ...
... What is the difference between demand and quantity demanded? What is the difference between supply and quantity supplied? What causes demand to shift? What causes supply to shift? Contrast shortage and surplus. Be sure to include what happens to price. List the four factors of production. Identify a ...
The Baffling New Inflation: How Cost
... Schultze had served on the Council of Economic Advisers as a staff economist and had then worked as an instructor at Indiana University. His paper, “Recent Inflation in the United States”, put forward a theory of ‘demand shift inflation.’ Schultze began by admitting that it was difficult to statisti ...
... Schultze had served on the Council of Economic Advisers as a staff economist and had then worked as an instructor at Indiana University. His paper, “Recent Inflation in the United States”, put forward a theory of ‘demand shift inflation.’ Schultze began by admitting that it was difficult to statisti ...
Study Questions for Final File
... In converting currencies to a common denominator such as the dollar, the procedure that uses the cost of a given basket of goods and services as the basis for setting the conversion rate for one currency into another is known as: a. exchange rate parity. b. consumer price index parity. c. purchasing ...
... In converting currencies to a common denominator such as the dollar, the procedure that uses the cost of a given basket of goods and services as the basis for setting the conversion rate for one currency into another is known as: a. exchange rate parity. b. consumer price index parity. c. purchasing ...
Document
... New Keynesians and Rational Expectations • New classical theory assumes complete flexibility of wages and prices. • New Keynesian rational expectations theory assumes rational expectations is a reasonable characterization of how expectations are formed, but drops the assumption of complete wage and ...
... New Keynesians and Rational Expectations • New classical theory assumes complete flexibility of wages and prices. • New Keynesian rational expectations theory assumes rational expectations is a reasonable characterization of how expectations are formed, but drops the assumption of complete wage and ...
Jacob Schulman
... A. Long-run economic outcomes have renewed debates about stabilization policy and causes of instability B. The chapter distinguishes between short run and long run aggregate supply - Extended model is used to glean new insights on demand-pull and cost-push inflation C. Investigate the relationship b ...
... A. Long-run economic outcomes have renewed debates about stabilization policy and causes of instability B. The chapter distinguishes between short run and long run aggregate supply - Extended model is used to glean new insights on demand-pull and cost-push inflation C. Investigate the relationship b ...
17.1 Inflation and Deflation
... Many older home owners will have paid off their mortgages The CPI may overestimate inflation Price rises may hide improvements in the quality of goods and services Cars and electrical goods may have gone up in price but this is due to new innovations ...
... Many older home owners will have paid off their mortgages The CPI may overestimate inflation Price rises may hide improvements in the quality of goods and services Cars and electrical goods may have gone up in price but this is due to new innovations ...
Economic Changes and Cycles
... • Demand-side inflation occurs when an _____________________ in the price level originates on the demand side of the economy. Demand-side inflation can be caused by an increase in the ____________________________. • Supply-side inflation occurs when an increase in the price level originates on the s ...
... • Demand-side inflation occurs when an _____________________ in the price level originates on the demand side of the economy. Demand-side inflation can be caused by an increase in the ____________________________. • Supply-side inflation occurs when an increase in the price level originates on the s ...
FedViews
... judge to be the natural rate of unemployment. Other signs of progress include lower unemployment insurance claims and declines in broader measures of unemployment that include discouraged and marginally attached workers. However, some measures of labor market slack, such as the labor force participa ...
... judge to be the natural rate of unemployment. Other signs of progress include lower unemployment insurance claims and declines in broader measures of unemployment that include discouraged and marginally attached workers. However, some measures of labor market slack, such as the labor force participa ...
MARKET REVIEW - Markets pare early Quarter gains as Strong
... US dollar will dampen the pricing power of the US economy, drive down inflation expectations and compress bond yields even lower. The outlook for China remains worrisome and described as “two steps forward, one step back” as authorities try to juggle both reform and growth at the same time. In Japan ...
... US dollar will dampen the pricing power of the US economy, drive down inflation expectations and compress bond yields even lower. The outlook for China remains worrisome and described as “two steps forward, one step back” as authorities try to juggle both reform and growth at the same time. In Japan ...
Risk and Uncertainty in Monetary Policy: Comments on Remarks by... Martin Feldstein
... banks to diversify into the underwriting activities previously reserved for investment banks. The economy’s favorable performance was helped by the surge of productivity that began in the mid-1990s. The productivity growth in the nonfarm business sector rose from about 1.5 percent a year between 19 ...
... banks to diversify into the underwriting activities previously reserved for investment banks. The economy’s favorable performance was helped by the surge of productivity that began in the mid-1990s. The productivity growth in the nonfarm business sector rose from about 1.5 percent a year between 19 ...
M. Finkler Macroeconomic Theory Answers to Problem Set #7 This
... 6. Inflation has been and remains of interest to economists for at least eight reasons: a. Inflation is impure - there exist winners and losers. b. Anticipated inflation has different effects than unanticipated inflation. c. Inflation has been asked to reconcile competing claims on income when there ...
... 6. Inflation has been and remains of interest to economists for at least eight reasons: a. Inflation is impure - there exist winners and losers. b. Anticipated inflation has different effects than unanticipated inflation. c. Inflation has been asked to reconcile competing claims on income when there ...
Fiscal and Monetary Policy
... 1. Pay off public debt Buy back bonds Puts $ back into the system, increases consumption • May offset contractionary policy that created the surplus ...
... 1. Pay off public debt Buy back bonds Puts $ back into the system, increases consumption • May offset contractionary policy that created the surplus ...
Econ 204 Practice Qu..
... a. Money demand is sometimes called the liquidity preference function. b. An increase in interest rates will move left along the money demand curve c. An increase in output will shift the money demand curve to the right d. A decrease in price levels will shift the money demand curve to the left e. N ...
... a. Money demand is sometimes called the liquidity preference function. b. An increase in interest rates will move left along the money demand curve c. An increase in output will shift the money demand curve to the right d. A decrease in price levels will shift the money demand curve to the left e. N ...
Inflation
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.Inflation affects an economy in various ways, both positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.Inflation also has positive effects: Fundamentally, inflation gives everyone an incentive to spend and invest, because if they don't, their money will be worth less in the future. This increase in spending and investment can benefit the economy. However it may also lead to sub-optimal use of resources. Inflation reduces the real burden of debt, both public and private. If you have a fixed-rate mortgage on your house, your salary is likely to increase over time due to wage inflation, but your mortgage payment will stay the same. Over time, your mortgage payment will become a smaller percentage of your earnings, which means that you will have more money to spend. Inflation keeps nominal interest rates above zero, so that central banks can reduce interest rates, when necessary, to stimulate the economy. Inflation reduces unemployment to the extent that unemployment is caused by nominal wage rigidity. When demand for labor falls but nominal wages do not, as typically occurs during a recession, the supply and demand for labor cannot reach equilibrium, and unemployment results. By reducing the real value of a given nominal wage, inflation increases the demand for labor, and therefore reduces unemployment.Economists generally believe that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. However, money supply growth does not necessarily cause inflation. Some economists maintain that under the conditions of a liquidity trap, large monetary injections are like ""pushing on a string"". Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.